Indian Crypto Exchange CoinDCX Suffers $44 Million Hack
CoinDCX, an Indian Bitcoin exchange, experienced a significant security breach last Friday, resulting in the loss of approximately $44 million. While the CEO acknowledged the attack, the exchange is facing criticism for allegedly attempting to manipulate its customers on social media.
This incident occurs a year after one of CoinDCX’s major competitors, WarzirX, reportedly lost $230 million. At that time, CoinDCX executives publicly criticized WarzirX’s handling of the situation.
Details of the Hack
The initial report of the attack came from ZachXBT, a well-known investigator in the cryptocurrency space. According to on-chain data, hackers stole $44.2 million in USDT and USDC from CoinDCX.
“The attacker’s address was funded with 1 ETH from Tornado Cash and subsequently transferred a portion of the stolen funds from Solana to Ethereum,” ZachXBT stated.
Following ZachXBT’s disclosure, Sumit Gupta, CEO of CoinDCX, confirmed the attack in a video announcement.
The company stated that customer funds held in the exchange’s wallets remain secure and that trading and withdrawals in the local currency, the Indian rupee, are operating normally.
“At CoinDCX, we have always believed in transparency with our community, hence I am sharing this with you directly,” Gupta said.
Controversy Over Communication and Alleged Manipulation
The exchange’s communication strategy has been met with widespread criticism, including from ZachXBT, who originally broke the news of the hack.
“Why is a CoinDCX team member asking people to engage with this post and thanking them for ‘transparency’?” ZachXBT questioned. “Your team waited 17 hours to disclose the incident (and only did so after it was publicly exposed).”
Screenshots reveal a CoinDCX employee, Suchit Karande, allegedly instructing users to thank the CEO for his efforts, a move perceived as a clear attempt at manipulation.
The message posted on Discord reportedly instructed users to comment with phrases like “thank you Sumit for being transparent,” while avoiding repetitive messages. “Very important: Follow all instructions exactly. Let’s keep the quality high,” the message continued.
FatMan, an investigator known for his work following the Terra (LUNA) collapse, pointed out that CoinDCX executives had previously criticized WarzirX after a similar attack a year prior.
“Also, in the past they criticized competitors for socializing losses after hacks. Surely they won’t be hypocritical… right?” FatMan commented.
CoinDCX faced another controversy in 2022 when it released its proof of reserves but then reportedly froze withdrawals.
User Concerns Over Price Discrepancies
As the attack shook customer confidence, many CoinDCX users sought to withdraw their cryptocurrencies to avoid potential losses or frozen withdrawals.
This led to increased volatility in the price of Bitcoin and other cryptocurrencies on the exchange, causing concern among users.
“Why is there a huge price difference between two exchanges? All of a sudden my portfolio went from +10% down to -10%. Prices are not this much down on other exchanges,” one CoinDCX user commented.
CoinDCX support responded by stating that “different exchanges may have distinct prices, and that is why this difference occurs.”
CoinDCX Launches Fund Recovery Program
CoinDCX has announced a reward program for individuals who assist in recovering the $44.2 million lost in the hack. The reward could reach up to $11 million if all funds are recovered.
“Up to 25% of any recovered funds will be granted to individuals or teams who help track and recover the stolen cryptocurrencies, but more importantly, who contribute to the identification and conviction of those involved.”
While the exchange has shared the hacker’s addresses, it has not yet compiled the information received, potentially leading to duplicate reports and confusion regarding reward claims.
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